Hydropower projects require successful management of both corporate governance - the set of internal rules and processes by which businesses are operated - and external governance, the political, institutional, legal and regulatory system within which the project is developed and operates.
Good corporate governance requires that key management processes are demonstrated, including corporate, political and public sector risks; compliance; social and environmental responsibility; procurement; ethical business practices; grievance mechanisms; transparency; and independent review. External governance risks that should be well-assessed include political risk, transboundary risks and corruption risks.
Adhering to good practice in governance will help a project developer, owner or operator to develop sound corporate business structures, policies and practices, as well as address transparency, integrity and accountability issues.
Understanding good practice
International industry good practice in governance for hydropower projects is defined in the Hydropower Sustainability Guidelines on Good International Industry Practice (HGIIP).
The guidelines were published by the International Hydropower Association and are governed by the Hydropower Sustainability Assessment Council, a multi-stakeholder group of representatives of civil society, industry, governments and financial institutions.
Assessing project performance
Two assessment tools are available to measure hydropower project performance:
The Hydropower Sustainability Assessment Protocol (HSAP) is used by independent accredited assessors to consider whether a project has achieved good and best practice at different stages of its life cycle. Governance is addressed in P-2 for the preparation stage, I-2 for the implementation stage and O-2 for the operation stage.
The Hydropower Sustainability ESG Gap Analysis Tool is used by independent accredited assessors to help project teams address any gaps against good practice in environmental, social and governance topics across 12 assessment sections. Governance is addressed in Section 12.